:
I call the meeting to order. I want to welcome everyone here.
Bienvenue.
This meeting is called pursuant to the Standing Orders, colleagues, to deal with chapter 4, “Canadian Agricultural Income Stabilization - Agriculture and Agri-Food Canada”, from the May 2007 Report of the Auditor General of Canada.
We're very pleased to have before us today, from the Office of the Auditor General, Andrew Lennox, assistant auditor general. He's accompanied by Mr. Raymond Kunze, director. Representing the Department of Agriculture and Agri-Food, we have Yaprak Baltacioglu, deputy minister; and Nada Semaan, assistant deputy minister, farm financial programs branch.
Before we go any further, did I pronounce your name right, madame? I'm sure I didn't.
Mr. Chair, thank you for the opportunity to meet with your committee today to discuss the audit of the Canadian agriculture income stabilization program, otherwise known as CAIS, which we reported on in chapter 4 of our May 2007 report.
With me today is Raymond Kunze, director of the Agriculture and Agri-Food Canada audit team.
We audited the CAIS program at the request of the House of Commons Standing Committee on Agriculture and Agri-Food. In this audit we examined, first of all, how Agriculture and Agri-Food Canada processes applications for income support; second, how it ensures that all parties respect the various monitoring provisions set out in the federal-provincial-territorial agreements; and third, how it measures and reports its performance to Parliament.
The department delivers the program in all provinces and territories except Alberta, Ontario, Quebec, and Prince Edward Island, where the provincial governments deliver the program. We did not audit the delivery of the CAIS program by provincial administrations.
[Translation]
Mr. Chair, I should point out that we completed our detailed audit work for this report in October 2006. Our ability to comment on developments since then is limited.
[English]
The CAIS program was designed to provide income support to agricultural producers when farm income dropped due to circumstances beyond farmers' control. At the time of our audit, Agriculture and Agri-Food Canada was receiving about 55,000 applications—
:
I'll start again in paragraph 6.
The CAIS program was designed to provide income support to agriculture producers when their farm income dropped due to circumstances beyond their control. At the time of our audit, Agriculture and Agri-Food Canada was receiving about 55,000 applications through CAIS every year. In the 2005-06 fiscal year, the department spent more than $1 billion on the program.
[Translation]
In the chapter, we noted that the CAIS program was very complex. We found that there was a lack of transparency in how the benefits were calculated. Producers did not receive, in an easy to understand manner, all the information they needed to ask for a payment adjustment or appeal an unfavourable decision.
[English]
There were long delays before producers were told whether they would receive a benefit and what the benefit would be. The department's service standard was 60 days for non-peak processing times and 90 days for peak processing times. We found that, on average, the department took 120 days to process the 2004 program year applications.
At the end of our audit, the department's records indicated that it met its service time standard for the 2005 program year applications about 38% of the time.
Furthermore, the processing of applications focused on detecting and preventing overpayments made to producers. For example, the major risk assessments test during the initial processing triggered a detailed review of applications, when there was an indication of a potential overpayment. However, there was no equivalent trigger for potential underpayments.
The review group returned about 30% of the applications it received to the initial processing group for correction, representing an error rate of about 7%, or $33 million. In our opinion, it would have been more efficient to improve its procedures to prevent errors in processing, rather than detect them during reviews at the end of the process.
The review group, in addition to other groups within the department, generated a lot of relevant information on the nature and extent of errors that were made during processing and that producers made in their applications. We noted that these data were not gathered and analyzed systematically. The department was therefore missing an opportunity to continuously improve the way it processed applications.
We also found that some department employees were acting as paid consultants, helping producers prepare their applications. This practice contravened the conflict of interest provisions and the Values and Ethics Code of the public service, and it could have provided an unfair financial advantage to some applicants. The department has since told employees to stop this activity.
Mr. Chair, in July 2007 the government announced it would replace the CAIS program with two programs, AgriInvest and AgriStability. We have not examined these programs. However, our understanding is that AgriStability is also a margin-based program for which program payments are based on similar eligibility criteria as the CAIS program, and that applications are processed in a similar manner by the same organizations. Therefore, we believe that our concerns and recommendations remain largely intact.
[Translation]
Following the tabling of our chapter, the department released an action plan that identified actions it had already taken and actions it planned to take to address our concerns. In addition, the department recently provided a status report on actions and progress.
As I previously stated, we have not done audit work in this area since 2006, so our ability to comment on the plans and results achieved is limited.
[English]
The committee may wish to ask the department to indicate how the actions taken have resolved the underlying problems and to demonstrate how the recommendations will be addressed with these new programs.
That concludes our opening statements. We would be pleased to answer any questions the committee may have.
Thank you.
:
Thank you, Mr. Chairman.
My name is Yaprak Baltacioglu. As mentioned, I'm the Deputy Minister of Agriculture and Agri-food Canada. I'm very pleased to have this opportunity to appear before the committee to respond to your questions on this very important report of the Auditor General.
I was briefed on the initial recommendations of the Auditor General's report in March 2007, a couple of weeks after I took over my position. We took the recommendations and the conclusions very seriously, and we started acting on them even before the report was tabled in Parliament.
At the outset, let me say that we welcome the Auditor General's report and we accept all of its recommendations. It's invaluable to us in two ways.
First, it helped us improve the CAIS program. It told us which areas needed improvement, which areas needed strengthening. We acted on them and are continuing to act on them.
Second and most important, as Mr. Lennox has mentioned, the new business risk management program suite benefits from the recommendations of the Auditor General's report. We have used a lot of their conclusions in the design and the implementation of the new program suite, so we're very grateful for the input.
The department's management response is part of the report. I'm not going to go through that. We have provided the committee with a chart in English and French that shows the actions taken since the Auditor General's report was tabled. As you'll see, there's a lot of detail in that document. I'm not going to take up your time in the opening remarks, but I'll just give you some of the highlights of what the department has done.
Our focus has been on three areas: administration and accountability, transparency, and conflict of interest.
Regarding administration and accountability, this is an area in which the department strives for continuous improvement. This is not a one-time fix. We're always learning, we're always fixing, and there's always room to improve. It's very important to note that in this area we always strive to strike the right balance between getting money out quickly to farmers and putting in place checks and balances that will ensure good public administration, and the Auditor General's report has recognized the fine balance that we have to achieve. So that's what we strive for.
We have done a number of things since the Auditor General's report. We're measuring our performance better, and in the fall we will be reporting to Parliament and to the public in terms of our performance measurement. The Auditor General has told us that we put more risk focus on overpayments to farmers, and that did not take into account underpayments and zero payments, which is important for the livelihood of Canadian producers. We have revised our reviews to ensure that we included this group of payments in terms of our checks. We have shortened our forms. We have put in electronic tools for the producers so that they can access their accounts. We're hoping these types of actions that we have taken make the administration and accountability of the program better.
The second area is transparency. This is, again, an area of continuous improvement. In the next program year—actually, it starts today for the 2007 year—we will be providing the producers with a calculation of benefits document that highlights the areas that the government has changed in their applications, because one of the things the Auditor General said was that when we sent out the forms to the farmers, between the pages they had submitted versus what we had given them, they couldn't tell what had been changed and why. So we are highlighting the changes. Further work is needed in this area, and we will continue to do that over the coming years.
We have also put in a service called “My Account”. A producer can go in through the Internet with their codes and check the status of their payment, where it is, what's happening to it, etc. We're hoping that will increase transparency.
The recent targeted advance payments that we have made and the letters that went back to the producers were way more detailed and explained way more how these things were calculated. We are learning from past experience, and we are benefiting from the Auditor General's recommendations.
Let me turn to the last area of our focus, the conflict of interest. Over the last year and actually prior to the Auditor General's report, we have strengthened the processes and systems in the department to ensure that potential risk of conflict of interest is minimized in the department, not only in CAIS but as it applies to the whole department.
We have a values and ethics office with a website, a 1-800 number, and staff to support it. We started formal training programs. We started them with CAIS because we have to focus on CAIS due to the AG's report, but we're expanding it to the rest of the department.
Periodically I put out documents to all staff to remind them of the values and ethics rules that they have to abide by. As well, management has sent in bulletins, things we call News at Work, so that employees are aware of the rules they have to live within and how important it is to ensure that the ministry advises the employees of their obligations.
Also, when we hire a new employee or when any employee comes into Agriculture and Agri-Food Canada, we now have revised our systems so that when they get their letter of offer, we ask them to acknowledge that they have received the Values and Ethics Code and to attest that they will comply with the rules of the code.
It's important to note that the code is values based. It's not a compliance-based code. The responsibility and the onus are on the employee to ensure that they comply with this important code, which is a pillar of Canadian public service. It is my accountability and my management team's responsibility to ensure that we inform our employees. As well, if we get any complaints, we do investigate, and we will continue to investigate.
[Translation]
To sum up, Mr. Chair, we welcome the Auditor General's report. It has informed our improvements to CAIS. The Auditor General's observations and recommendations have been carried over to the new suite of business risk management programs.
[English]
Mr. Chairman, we have made progress, and we will continue to do so, but we still have a lot of work to do.
I'm ready to answer your questions.
Thank you, sir.
Good day to all the witnesses.
Mr. Lennox, the Auditor General's report stressed the fact that the program is very complex, particularly with regard to managing applications from farmers. Out of 57,000 applicants, 25,000 got no payment despite making an application. Did you assess the program's effectiveness with regard to real problems experienced by farmers?
Some 32,000 farmers did receive compensation, but 25,000 others did not receive any. Is it because the program is too complex or were there administrative errors? Some of those 25,000 farmers did not get any compensation when they should have. Was the program too cumbersome to manage?
I can understand why the audit was done in 2004, but I would deal with farmers in my riding in 2006, and believe it or not, some of them would be dealing with, it seems to me, the 2003 year. There was a real lag between that.... And the real problem, of course, was that a lot of these farmers were facing an immediate income crisis for that year, let alone worrying about 2003 and 2004. So I can understand why the auditor would be looking at application forms and so on that would go into 2006.
I guess we want to look at the future here, because this is an indictment of the past, a program that we're talking about from 2004, and we are looking at making things work for people rather than carrying on with things that don't work.
It's my understanding now that the CAIS program has been replaced by a number of new programs, I think under the AgriInvest and AgriIncome name. Is that correct, Deputy Minister?
I think I'll stick with Deputy Minister, if that's okay with you.
:
Absolutely. Maybe I'll start, and I can turn it over to the assistant deputy responsible for our programs.
Continuous improvement is the nub of this whole report for us. We have done a number of things. We now have a whole team, which cuts across the department, that works on continuous improvements. We get a lot of data. We get call centres. We know from producers what's not working. Our processors are processing, and there are a number of errors they keep making. If we can't take those things and improve our programs, we're failing.
So we have made quite a number of improvements. Our error rates have gone down. This year, to date, we are under 2%. Our internal error rates are coming down as well. One of the things the Auditor General said was to do it right the first time rather than get caught afterwards, because it's not good practice.
Nada, do you have anything else to add?
:
Thank you, Mr. Williams.
Before we go to the second round, I have an issue I want to pursue with you, Deputy, and this involves the change in the procedure that took place within the department for, I believe, the 2004 crop year.
According to the auditor's report, the change in the procedure or the policies took place after approximately 20% of the CAIS applications were filed and processed. The change in the procedure led to an increase in eligibility for the CAIS payments, and in one case identified by the auditor, the farm applicant received an additional $90,000 because of the change in the procedure, which was good. It was substantial.
My concern and the concern that was raised within the auditor's report is that the 20% who had already filed and had their applications processed based upon the old rules most likely left an underpayment on the table. To be fair and equitable to all farm communities, I would have liked to see—and I didn't see it identified—that for the 20% who actually filed and had their applications processed, the department would go back and take each and every one of them so that these farmers, if they were in fact eligible for an additional payment, would have received the payment.
Has that been done?
:
It's unbelievable that a member of your department working on the program, being paid by our federal government, would be selling his or her services to.... It's unbelievable.
I'd like to go back to this business on provinces. CAIS covers the country, but could we get information, madam, from your department on how much CAIS money went to each province?
We're only dealing with about 55,000 applicants from the provinces that you administered directly. Could we get, for the committee, the number of producers by province and the amount of money that went out by province?
There's also interest in seeing the amounts in terms of categories: more than $50,000, more than $100,000, more than $1 million by province. It would be very relevant, Mr. Chair, to look at this program in total and to see the future. Hopefully you have a better program, but I can't believe this business on employees. Really, it's....
As for the employees, are those people still working in CAIS?
:
No, but it is a sad day, Madam Deputy, when farmers today have to set up two or three corporations to cover what they're doing. In fact, they're really at a great disadvantage if they have a mixed farming operation. The diversity that our department has advocated is actually not to the benefit of, or contrary to the best interests of, many people in our agricultural community.
Getting back to your employees, you talked about seasonal employees. Are they $12-an-hour people who are working for you, or are they paid a significant wage? We had complaints under CAIS, when someone with a large feedlot and many steers was calling Winnipeg, and the call came back to the him to ask, how many of those steers would calve in the spring? That becomes a little bit of a problem.
So are they good people to whom you're paying good wages, or are you simply putting together 100 people to handle the paperwork that comes to Regina or Winnipeg?
In fact, none of them, Mr. Chair, had calves the following spring.
:
Well, certainly, on behalf of the committee, I want to thank you all for your appearance here today. Agriculture is probably one of the most complex but also one of the most important industries we have in Canada. I think everyone around the table wants to have an adequate, efficient safety net. I know there have always been changes, and it's always being improved upon.
Again, we want to thank you very much for your appearance here today, and we wish you all the best.
Okay, colleagues, that concludes that part of the meeting. The only other item we're going to deal with—the witnesses don't have to stay if they don't want to, but they're welcome to if they wish—is the tabling, discussion, and approval of the minutes of the steering committee meeting, which was held yesterday. Those minutes have been circulated.
I want to point out a minor amendment. Paragraph 8 talks about a meeting on chapter 10. Again, this will be subject to the discretion of the steering committee and the committee, but tentatively we talked about chapters 8, 9, and 10, three chapters, on the environment. So you can amend chapter 10 and insert 8, 9, and 10.
Having made that amendment, is there any discussion on the minutes as circulated?
Yes, Mr. Williams.